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Showa Shell, the Japanese subsidiary of global oil giant Royal Dutch Shell, has predicted that its solar unit Solar Frontier will be able to cut production costs of its solar modules by half in the next few years as it seeks to emerge as one of the world’s biggest solar module manufacturers.

Some pundits are convinced that the dramatic price plunge that has accompanied a glut in solar panels will be reversed once the market returns to balance, but such predictions ignore the ongoing cost reductions being achieved by solar module manufacturers.

Last week, US manufacturer SunPower (majority owned by another international oil major, Total) said it had reduced costs by 25 per cent in 2012 and expected reductions to continue this year.

Showa Shell, which owns Solar Frontier, said it expected the cost of its thin-filmed CIGS (copper, indium, gallium and serenium) solar panels to fall by half by 2017. Last month, the company announced it had gained an energy conversion efficiency record of 19.7 per cent, breaking a 10-year record for thin-film modules, and without the use of cadmium.

The 50 per cent cost reduction target was outlined by Showa Shell president Jun Arai this week as part of a five-year management plan that aimed to elevate Solar Frontier to among the leading solar manufacturers in the world, reclaiming a position that Japanese solar firms once dominated in the 1990s before the emergence of German and then Chinese manufacturers. “Once we gain a foothold in Japan, we want to gain ground in the international market,” Arai told the briefing. Solar Frontier is regarded as one of the closest competitors to thin-film industry leader, the U.S. based First Solar.

Solar Frontier thin film panels at Coober Pedy airport in Australia.

The latest push is being supported by Japan’s newly introduced feed-in-tariffs for solar following the Fukushima nuclear crisis that is expected to create the world’s third biggest market in solar panels in 2013, with demand of around 4,500MW. The Japanese manufacturer Sharp has similar ambitions.

Solar Frontier has recently completed a new 900MW module factory in Kunitomi that produces panels with a 13 per cent efficiency and is looking at upgrading a recently closed 60MW plant to take account of recent technical developments. Showa Shell began research on solar panels in 1978 and investigating CIGS modules in 1993. It posted revenue of $833 million in 2012 and recorded its first positive quarterly income in the fourth quarter.

Under the heading “Mega solar market in Japan is booming!”, Showa Shell said in its recent annual report that it is currently building seven solar PV installations of between 1MW and 5.3MW, all of which will be completed this year, and is installing rooftop panels on 2,000 stores of one major Japanese retailer. It also formed a joint venture with Belectric, a German group which this year said it was looking to build its first solar PV plant in Australia.

It is also working on developing CZTS (copper, zinc, tin, sulfur, and selenium) thin-film solar modules, which it describes as the “next-generation” solar module technology, and recently claimed an energy conversion efficiency of 11.1 per cent with that technology.

About the Author

Giles Parkinson is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.

This article missed the point… what are the module and system prices per watt for these thin film solar panels?

http://www.facebook.com/matthew.t.peffly Matthew Todd Peffly

Or it is right on point, it is giving examples that price cuts are still in the pipeline. Even past the prices that exist today.

http://soltesza.wordpress.com/ sola

Yes, but the price cut is not relative to current market-leading prices but their own prices which is mostly meaningless.

http://zacharyshahan.com/ Zachary Shahan

well, i think the point is that the company feels confident it will cut prices enough to compete better with First Solar (one of the top 10 solar module manufacturers in the world). we’ll see.

jeffhre

Or they would like purchasers to hold off on buying from manufacturers like First Solar and thereby drive up their inventory and COGS spending?

robS

I don’t think its really possible for an article to miss it’s own point, seeing as the point of the article is whatever point its author makes. Perhaps you mean it missed the point you think it should have made, either way if you think there’s a different point how about you write an article and submit it for publication?

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